Olympus Corp was in the spotlight in the afternoon, jumping 9.9 percent to a near three-month high after the medical equipment and camera maker said it would propose giving U.S. hedge fund ValueAct Capital, the biggest shareholder, a board seat.

The Nikkei share average rose 1.0 percent to 20,359.70. For the week, it added 4.1 percent, the biggest weekly gain in more than two months.

Helping the Nikkei moved back above 20,000 has been hopes of a U.S.-China trade deal, which tempered worries over global growth.

"The Nikkei now seems comfortable above 20,000. It may gradually recover further while it prices in developments of global issues," said Takuya Takahashi, a strategist at Daiwa Securities.

"The market consensus is that the U.S. and China will compromise to some extent for mutual benefit, but it still remains the market's major concern," Takahashi said.

Wall Street rose after Federal Reserve Chairman Jerome Powell said the U.S. central bank intends to further shrink the balance sheet.

Fast Retailing jumped 6.2 percent and contributed a hefty 120 points to the Nikkei index. The operator of Uniqlo clothing stores reported an 8 percent fall in operating profit for September-November and kept its operating profit forecast for the year ended August 2019 unchanged at 270 billion yen.

Analysts downplayed the quarterly profit fall, saying it was due to inventory being cleared following unseasonably warm winter weather and did not reflect operational issues.

"It may affect earnings for this fiscal year through August, but its earnings will likely recover in the next fiscal year," Kuni Kanamori, analyst at SMBC Nikko Securities, said in a report.